Amazon to Apple: My Tablet Can Beat Up Your Tablet

Amazon's a Mac. Apple's a PC.

Apple(NASDAQ:AAPL) has overpriced and under-packed its iPad mini, and Amazon.com(NASDAQ:AMZN) is letting everyone know it.

Amazon's busy landing page began dissing Apple's new petite tablet over the weekend.

"Much More for Far Less" reads the headline, followed by a comparison table pitting the $329 iPad mini with Amazon's $199 Kindle Fire HD.

Playing up that the Kindle Fire serves up high-def graphics with 216 pixels per inch -- while the iPad mini in a standard definition device with 163 pixels per inch -- may not seem fair. Apple's screens always look far better than spec sheets may suggest, and the iPad mini's screen is also substantially larger. Playing up the dual stereo speaker in the Kindle Fire HD versus Apple's mono speaker won't be much of a factor to folks donning headphones. Promoting Amazon's "ultra-fast MIMI Wi-Fi" may fall on deaf ears, since Apple products aren't notorious for a lack of connectivity.

However, the value argument is being made resoundingly clear.

Why pay 65% more for what is, in some regards, an inferior entry-level tablet?

The $329 problem I wasn't the only one suggesting that Apple was going to have a pricing problem with the iPad mini.

This is a battle that Apple was never going to be able to win. If it went too low or gave the iPad mini too many of the full-sized iPad's features it would crush its larger sibling. If it priced its new handheld gadget too high or skimped on the traditional iPad features -- and that's the path that Apple chose on both fronts -- it wasn't going to make a dent in the $199 tablets that Amazon and Google(NASDAQ:GOOGL) are succeeding with these days.

Apple is making itself vulnerable. Shrinking the iPad screen was a smart idea. Failing to go with the Retina Display graphics or powerful A6X chip wasn't such a smart idea. It's giving holiday shoppers the 2011 iPad in miniature at a time when Google and Amazon seem to be putting out 2013-worthy products.

Selling well now, but...Apple bulls will counter that business has been booming since the world's most valuable tech company began taking preorders on Friday. The wait times for online orders are now two to three weeks.

Sure. The thing is going to sell well initially. Taken 2 drew a big crowd during its opening weekend, until the early multiplex adopters spread the word that it wasn't as good as the original. If Apple fans don't see the problem in the Cupertino giant intentionally putting out a product that's inferior to something it already has on the market -- at a time when competition is intensifying -- you fell asleep through too many case studies in business school.

Apple longs will argue that it doesn't matter what Amazon or Google do. Apple is the one making the lion's share of the earnings in mobile gadgetry. That may be true, but it doesn't mean it's immune to the acts of cutthroat competitors. Android phones far outsell iPhones worldwide. Don't you think that Apple would be selling a lot more iPhones if Android wasn't around? Don't you think that Apple would be making far more money in mobile if Google hadn't made Android an open-source platform that's freely available to any hardware manufacturer?

Apple has earned the right to be the country's most valuable company in terms of market capitalization. However, it wasn't that way just a few years ago.

Remember when the shoe was on the other foot It was Apple -- played by Justin Long -- doing the attacking when the 2006 "Get a Mac" ads rolled out. Attacking Microsoft's (NASDAQ:MSFT) Windows-fueled PC -- played by the stodgy John Hodgman -- in a side-by-side comparison was Apple's thing.

This is what hungry underdogs do, and sometimes it even works. Pepsi bashes Coke. The Whopper beats the Big Mac. And, for now at least, the Kindle Fire HD is taking shots at the iPad mini.

Apple is in an unfamiliar position. Responding to the attack is risky. Clearing up misconceptions is smart, but not if it validates the competition in the recognition process.

Amazon has often used its juicy dot-com real estate to promote its Kindle and Kindle Fire products. However, it never pitted the Kindle against Barnes & Noble's (NYSE:BKS) Nook. It didn't have to. It wasn't the one playing from behind. However, now that Amazon is naming names -- and Apple is that name -- it could be a problem.

Amazon is big and getting bigger in terms for consumer appeal. If you think that Amazon's website has been busy now, generating $33.6 billion in sales through the holiday quarter, watch it dance during the holiday quarter.

Apple should've seen this coming. Amazon called out Apple's iPad mini -- point by point -- in last Thursday's earnings press release. Amazon is going to chew on this like a dog on a bone. Tablets aren't PCs. They're used for running apps, streaming media, and surfing the Web. Apple may have all ecosystems beat on the apps front, but how is it going to look if Amazon continues to hammer home the superior HD graphics, dual stereo speakers, and MIMO-backed Wi-Fi?

Apple doesn't have to keep up with the Joneses to win. The iPhone 4S was a hit despite lacking the 4G connectivity that many Android handsets had last year. Apple's clearly doing well with the NFC-less iPhone 5 now. However, just as Samsung is attacking the cult of iPhone early adopters with its latest TV ads, now it has Amazon taking legitimate shots at the iPad mini's strategy of skimping on specs and gouging on price.

Something's got to give.

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Author

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.
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